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Irish times blames landlords for protecting their investment

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    #122
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    TheChizler wrote: »
    Why should those things specifically affect the deposit? What risk added by them does an increased deposit offset?

    What risk? Financial risk. For a landlord it is a business afterall- and if you make the business a more risky proposition- as has happened, the logical counter measure a REIT (in this instance) will take- is to attempt to mitigate the additional risk- in an appropriate manner.

    Additional deposit requirements (or lets call a spade a spade- its a formalisation of what was actually occuring)- are a counter to increased difficulties landlords have with tenants who choose to overhold and/or stop paying their rent. Its a small counter measure- which is why there are significant rent discounts available to those who pay enhanced deposits (the example which arose in this forum last month- was an apartment in Christchurch being offered for 20% below market rates- + a 6 month deposit). This was organised by a US multinational for a staff member they were having come here on a 2 year contract.

    There really isn't a one size fits all out there- and trying to shoehorn all tenants and all landlords- into an identical business model- patently isn't working.


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    #123
    TheChizler
    Registered Users Posts: 9,455 ✭✭✭TheChizler


    The_Conductor wrote: »
    What risk? Financial risk. For a landlord it is a business afterall- and if you make the business a more risky proposition- as has happened, the logical counter measure a REIT (in this instance) will take- is to attempt to mitigate the additional risk- in an appropriate manner.

    I understand that there always has been financial risk, what I'm asking is how do things like the below, longer notice periods, longer part 4s, rent controls, etc. create a larger financial risk for the landlord which didn't exist before? Is there an increased risk of damage or non payment by the tenant as a result of these measures?
    Marco Obedient Springboard wrote: »
    There is no "sole reason" for LL demanding higher deposits, it's a combination of many things with the extremely unbalanced rights tenants now have compared to LLs being a driving force. Longer part 4s, rent controls, a totally tenant focused RTB, longer notice periods etc etc etc.


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    #124
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    TheChizler wrote: »
    how do things like the below, longer notice periods, longer part 4s, rent controls, etc. create a larger financial risk for the landlord which didn't exist before? Is there an increased risk of damage or non payment by the tenant as a result of these measures?

    It's probably reasonable to say all of the above (while maybe not directly increasing risk) has prompted some landlords to completely reassess their operating model including their approach to risk/deposits.


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    #125
    TheChizler
    Registered Users Posts: 9,455 ✭✭✭TheChizler


    Graham wrote: »
    It's probably reasonable to say all of the above (while maybe not directly increasing risk) has prompted some landlords to completely reassess their operating model including their approach to risk/deposits.
    I'd agree, but it does go against the purpose of the deposit which is the bit that annoys me.

    My own opinion is that the current situation more accurately reflects the true risk that existed all along, and only with recent demand they have the ability to require it.


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    #126
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    With any business there will be leaning periods that you swallow in the knowledge that there will be better times where you can make more money. The average of these will be your profit or loss.
    So landlords swallowed the last big lean period and as soon as it looks like they will be entering a good period where they can raise their average ..... Govt interference in a big way. They are now not allowed to take advantage of an upturn even though they had the pain of the last downturn.

    So now they will look for any way they can of trimming costs, as well as anything possible to limit exposure to large unexpected costs.
    Some will just give up and move on. Others will figure out ways to make a profit. Nobody will gain from the situation in the long run.

    And add to that that now the govt have proven that at any time they could fcuk you up even more with the stroke of a pen.

    The landscape is a changin. And fast. Where it will end up is entirely up in the air.


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    #127
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    TheChizler wrote: »
    My own opinion is that the current situation more accurately reflects the true risk that existed all along, and only with recent demand they have the ability to require it.

    I'd (almost) absolutely agree with that. I still think a landlords risk is disproportionate when you consider how long a non-paying tenant can remain in situ, I don't think further increasing deposits are the appropriate form of rebalance there as it unfairly burdens the good tenants.


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    #128
    awec
    Administrators Posts: 53,839 Admin ✭✭✭✭✭awec


    jamesthepeach wrote: »
    With any business there will be leaning periods that you swallow in the knowledge that there will be better times where you can make more money. The average of these will be your profit or loss.
    So landlords swallowed the last big lean period and as soon as it looks like they will be entering a good period where they can raise their average ..... Govt interference in a big way. They are now not allowed to take advantage of an upturn even though they had the pain of the last downturn.

    So now they will look for any way they can of trimming costs, as well as anything possible to limit exposure to large unexpected costs.
    Some will just give up and move on. Others will figure out ways to make a profit. Nobody will gain from the situation in the long run.

    And add to that that now the govt have proven that at any time they could fcuk you up even more with the stroke of a pen.

    The landscape is a changin. And fast. Where it will end up is entirely up in the air.

    Nobody is meant to gain from it long term.

    It's a short term measure until they sort out the lack of supply.

    When it comes to deciding between people not being able to afford somewhere to live and landlords making higher profits it is hardly surprising that the government prioritise the former.

    Certainly sucks for landlords and I sympathise with some landlords to a degree but unfortunately it's necessary at the moment. The government need to do a lot more than they currently are to increase supply though.


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    #129
    TheChizler
    Registered Users Posts: 9,455 ✭✭✭TheChizler


    Graham wrote: »
    I'd (almost) absolutely agree with that. I still think a landlords risk is disproportionate when you consider how long a non-paying tenant can remain in situ, I don't think further increasing deposits are the appropriate form of rebalance there.
    True, and a faster RTB/court process is needed definitely. I just get the feeling, (based on no real evidence :P) and I may be wrong about the scale of it, that a lot of smaller landlords are annoyed they can't raise rent above 4%, see the larger REITs raising the deposit, and decide doing the same is a way of getting around that. Of course when it comes to returning it some unprofessional landlords will have spent it and there will be issues getting it back. Give it a few months and I bet we'll see more occurrences of this on this forum.


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    #130
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    TheChizler wrote: »
    True, and a faster RTB/court process is needed definitely. I just get the feeling, (based on no real evidence :P) and I may be wrong about the scale of it, that a lot of smaller landlords are annoyed they can't raise rent above 4%, see the larger REITs raising the deposit, and decide doing the same is a way of getting around that.

    I think you're probably right about the REITs resetting expectations.
    TheChizler wrote: »
    Of course when it comes to returning it some unprofessional landlords will have spent it and there will be issues getting it back. Give it a few months and I bet we'll see more occurrences of this on this forum.

    I'm not sure we'll see more instances of unfair deposit retention. The vast majority will continue to fairly return deposits as they always have. That's not to say the impact on tenants with unscrupulous landlords won't be greater.

    Time will tell.


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    #131
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    Problem is that you have lots of people who made a loss in the bad times and are now stuck making a loss. Even if they were only breaking even now that's a loss averaged out.

    I'd guess they will be leaving the rental market never to return.

    Then you have those who might be making a small profit. They will probably be looking now and deciding there are better ways to invest their money.

    And then you have the REITs. They'll be blazing the trail on how to cut costs now and then followed.by anybody remaining in the business shortly after.

    Interesting times ahead for property.


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    #132
    awec
    Administrators Posts: 53,839 Admin ✭✭✭✭✭awec


    jamesthepeach wrote: »
    Problem is that you have lots of people who made a loss in the bad times and are now stuck making a loss. Even if they were only breaking even now that's a loss averaged out.

    I'd guess they will be leaving the rental market never to return.

    Then you have those who might be making a small profit. They will probably be looking now and deciding there are better ways to invest their money.

    And then you have the REITs. They'll be blazing the trail on how to cut costs now and then followed.by anybody remaining in the business shortly after.

    Interesting times ahead for property.

    Making a loss* with an asterix because at the end of the day they are still paying down the capital on a high value asset.

    They are just having to spend more of their own money on their own property than they'd like.


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    #133
    the_syco
    Registered Users Posts: 37,301 ✭✭✭✭the_syco


    xpletiv wrote: »
    The IT are right; two months deposit is ludicrous, and LL should be ashamed of themselves.
    Blame the people who don't pay the last months rent.
    awec wrote: »
    Letting is a business, business has risk, if you don't like the risk sell the house and put the money in your mattress.
    Reduce the risk by asking for two months deposit and rent the property as unfurnished.
    grogi wrote: »
    Protect good tenants, protect good landlords...
    Currently it's screw the good landlords, and the bad tenants can screw landlord after landlord and not pay money owed due to lack of funds.
    awec wrote: »
    They are just having to spend more of their own money on their own property than they'd like.
    It's a business, not a charity. If they're making a loss, increase the rent. Increase the deposits. Increase the homelessness as people can't afford the rent or deposit, but as they're not a charity, why should they care?


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    #134
    jamesthepeach
    Registered Users Posts: 992 ✭✭✭jamesthepeach


    awec wrote: »
    Making a loss* with an asterix because at the end of the day they are still paying down the capital on a high value asset.

    They are just having to spend more of their own money on their own property than they'd like.

    I think it's clear you don't understand how property investment works. Not all landlords are making a profit. Simple as. Make all the assumptions you feel like, but you can see by the amount leaving and the ones staying who are doing g their best to cut costs where it's going.


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    #135
    fash
    Registered Users Posts: 2,275 ✭✭✭fash


    The 1 month's deposit is really a holdover from pre-RTA times when tenants could be kicked out on a whim and apartments were filled with furniture found in a skip.
    Since the introduction of the RTA, deposits should be in the order of 1 years rent (or a suitable guarantor) to match the actual risk increase. That it had taken 13 years for landlords to even think about correcting the situation is actually quite odd


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    #136
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    fash wrote: »
    The 1 month's deposit is really a holdover from pre-RTA times when tenants could be kicked out on a whim and apartments were filled with furniture found in a skip.
    Since the introduction of the RTA, deposits should be in the order of 1 years rent (or a suitable guarantor) to match the actual risk increase. That it had taken 13 years for landlords to even think about correcting the situation is actually quite odd

    Some companies are paying 6 months deposit on behalf of staff members- however, they are the exception rather than the rule- and they demand (and are given) large discounts on the rent in recognition of this. I've only heard of one guy who paid a full year's deposit- and he similarly got a chunky discount on his rent in recognition of this.

    A new measure I've encountered- is 3 month's deposit- and rent paid quarterly in advance. It doesn't say anywhere that rent has to be paid monthly- though quarterly is a bit odd- and wouldn't suit very many people- unless, their company was paying the rent- though it does insulate the landlord a little from an overholding tenant or someone who decides to stop paying rent.

    Changing the rent payment period to quarterly- could arguably work a lot better for landlords- than increasing the deposit requirement.


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